Ritter's chain eyes Chicago suburbs

An Indiana ice cream chain plans to move into the Chicago suburbs, franchising up to 40 stores.

Ritter's Frozen Custard of Indianapolis plans to open its first stores in Chicago within the next three months. The company-- which operates 60 stores in Indiana, Michigan, Ohio, Texas, Nevada, Tennessee, Florida and South Carolina -- is still waiting for approval to sell franchises in Illinois, says Bob Ritter, CEO of Ritter's.

Mr. Ritter says the company initially didn't follow up on plans two years ago to open locations in Illinois. But now he says Ritter's is eyeing suburbs like Naperville, Deerfield, Evanston and Palatine for possible initial locations.

The cost for a franchise license will be about $25,000, Mr. Ritter says. The initial investment in a strip-mall store would be about $300,000 and a stand-alone store would be about $500,00, he says.

But one analyst cautions against opening an ice cream franchise in a cold-winter city like Chicago.

"That's a questionable business model. These dip shops and ice cream shops and yogurt, they're such low-volume stores. It's such a narrow menu," says Bob Goldin, executive vice president of Technomic Inc., a Chicago based restaurant consulting group. "It's a highly competitive market and costs tend to be a little higher."

He says that Mr. Ritter's chief competitor, Culver's, has succeeded in Chicago due in large part to the quality of its lunch and dinner menus.

But Mr. Ritter says that his experience proves that there won't likely be a lag in sales.

"The challenge is going to be in Chicago that the locations are extremely busy and, will people stand in line?" Mr. Ritter says. "When we opened up in Las Vegas, our franchisee out there said that was her biggest concern, could we turn over (the orders) quick enough."